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Honourable Speaker,
Honourable Deputy Speaker,
Honourable Premier,
Honourable Members of the Legislature,
Ladies and Gentlemen.

It is a great pleasure for us to table the 2001/2002 budget proposal for VOTE 2: Department of Finance. This year departments are not required to table their annual report at the same time as budget, therefore, only the budget proposals will be tabled.

OVERVIEW

The Department of Finance is the custodian of the entire financial regime of the province. The main objective of the department is:

1. To maintain sound public finances of the province by:

* Overseeing the financial health of the province including budgeting, monitoring of expenditure, managing the bank accounts and provincial debts.
* Providing financial management advice to line departments
* Providing payment and accounting services, including payment of salaries and creditors, and reports to the Auditor-General
* Overseeing provincial procurement, including the provision of support to the Tender Board

2. To provide professional Information Technology service to the provincial government

3. To build and sustain a professional and ethical administration that always strives for continuous improvement.

Our outputs and outcomes include:

* The tabling of a credible and sustainable provincial budget that meets the conditions set in the PFMA and the Division of Revenue Act (DORA);
* The handling of dispensation and providing the required pronouncements to departments;
* Providing payment and accounting services (including payment of salaries and suppliers, and all reports to the Auditor-General),
* Management of cash flow and bank accounts so that risk to province is minimised and
* Continuous administration of tenders and contracts and provision of tender information.

The functional areas of the department are divided into two Chief Directorates viz. Accounting Services and Financial Planning and Expenditure Control, and an Administrative Support Services: Budgeting, Expenditure and Revenue Management.

REVIEW OF 2000/2001

Last year, Mr. Speaker, this House initially voted funds to the amount of R321.1 million for this department. This amount was adjusted to R219. 452 million. The downward adjustment was due to the fact that the original amount included provincial reserves.

It is therefore necessary, Honourable Speaker, to account on how these funds were utilised, and what the department achieved with those funds over the past year. In accounting for these funds we will show the extent to which our main objectives were achieved during this year.

The current financial year has been challenging. The challenge we faced, inter alia, was to build the department to gear it to face the challenges that have been created by the new practices and legislations such as the PFMA, DORA, etc. We succeeded in filling some critical senior management posts some and these appointments have enhanced the management capability and efficiency and therefore boosted the ability of the department to meet its service objectives and that of the entire provincial government.

The exercise to restructure the department is continuous. The department refined and fine-tuned its strategic plan, and the Fraud Prevention plan of the department will be ready by the end of this month, March 2001.

The department continued to interact with the National Treasury on the new budget process and other improvements in public sector budgeting. Within the province, the department continued to interact and consult with departments on issues of budget and other financial matters. Workshops on cash flow and budgets were conducted and information was parted to departments. Departments were involved in the budgetary process through the Medium Term Expenditure Committee hearings. Through all these efforts, the department managed to produce a credible and indeed a sustainable budget.

This period has also witnessed the appointment of the fifth Provincial Tender Board. During this period, the services of the Tender Board were decentralised. This helped a great deal in bringing the services of the Tender Board closer to the people. This included the establishment of five additional satellite offices in the areas of Piet Retief, Elukwatini, Tonga, Moretele and Middelburg where the public can get tender documents and also deposit them there on the closing dates.

The Tender Board also got involved in an outreach programme to various parts of the Province to enhance public participation in our procurement processes. The Board vigorously applied the criteria of Black Economic Empowerment during the assessment and awarding of tenders. However, the Board was faced with a lot of challenges from the established companies, which still believed that they were entitled to specific government contracts.

During this period the Tender Board adjudicated on R335 784 282 worth of tenders of which R92 829 082 went to established enterprises and R242 955 199 was awarded to small micro and medium enterprises (SMMEs) and the previously disadvantaged individuals (PDIs). These tenders involved work ranging from provision of social pension, construction of schools, road and storm drainage system. This is clear testimony that the government is using the procurement system as a tool to address some of the socio-economic objectives, and to fulfil our empowerment policy interests.

Provision of quality information to the National Treasury remains one of our challenges. The Executive Council decision to change the management system could not have come at a better time. This change comes at a time when the PFMA imposes heavy responsibility and accountability on departments and their heads. The migration to BAS, we hope, will improve reporting and accountability and therefore will boost the sound financial management of departments.

During this period under review the Department improved its reporting requirements to the National Treasury as we have stated earlier on. The National Treasury released the supplementary grant of R150 million to the province because the Department met all the reporting requirements in terms of the PFMA and DORA. The Department also prepared and submitted reports on the disbursement of the flood reconstruction fund.

We continued, as a Department, to provide effective financial services to other departments by means of payments to suppliers as well as salaries, replacements of cheques and a whole range of other duties which have, up to now, been performed centrally. Now that these functions have been decentralised, we shall continue to oversee this process to its completion.

On own revenue, the Department held bi-laterals with departments to identify and highlight new sources of revenue and ways of improving current sources. Verification done through the Natis reports revealed that Local councils under-deposited by R10 183 769 and we are in the process of recovering those arrears.

Areas that need improvement include optimal collection of revenue by departments, for example house rentals needs to collected optimally. Further, Persal related revenue was not accounted for into the Newfin system, as there was no interface between the two systems e.g. parking for officials, house rental, etc.

OUTLOOK: THE 2001/2002 BUDGET

Provincial Own Revenue:

For the financial year 2001 the province will continue with its efforts of maximising revenue generation of own revenue. Measures to improve collection of own revenue include:
* Standardising policies around revenue collection in the province including determining uniform rates to hospitals, nature reserves and public resorts;
* Monitoring newly identified sources of revenue for departments, for example, toll gate surcharge fees, vending machine on government premises in the province remains crucial.
* Reviewing of trade accounts within provincial departments
* Ensuring the speedy provision of personalised vehicle registration number plates

In exploring ways and means of increasing and enhancing the ability of this province to increase its own revenue collection potential the Department will collaborate and co-operate with the line departments that are responsible for revenue generation.

Expenditure budget 2001/2002

Honourable Speaker, Vote 2, Department of Finance, manages five departmental programmes:
1. Administration
2. Financial Management
3. Budget Planning and Expenditure Control
4. Provincial Contingency Reserve
5. Provincial Conditional Grant, which include:
* Loan redemption
* PFMA implementation
* Own revenue

Honourable Speaker, the budget proposal request I am tabling today for the Department of Finance amounts to R452, 6 million. This includes provincial debt budget of R40 million and Provincial Conditional Grant of R297, 384 million including own revenue of R193, 212 million. These funds have been budgeted for within the department of Finance but are for the entire province.

Now let us turn to the programmes of the department and their budget proposals:

Programme 1: Administration

R20, 182million has been allocated to this programme for the Administration of the department. This programme includes the Office of the MEC, which is allocated R1, 972 million, the Office of the Head of Department, which is allocated R1, 186 million, Project and Planning which is allocated R0,450 million and Legal Services which was allocated R0, 445 million, Management Service which is allocated R4, 366 million and Corporate Services R15, 816 million

The expenditure includes the remuneration of the administrative staff in the office of MEC, and the administration of the department.

Programme 2: Financial Management

A total amount of R23, 589 million has been allocated to this programme. This programme includes the Directorates of Financial Management, which is allocated R0, 638 million, Financial Planning and Control, which is allocated R9, 724 million and Accounting and Procurement Services which is allocated R18, 778 million

This expenditure will be for the implementation of the financial management objectives of the department.

Programme 3: Budget Planning and Expenditure Control

A total amount of R44, 447m have been allocated to this programme. This programme includes the Budget Office, which is allocated R1, 624 million, Revenue and Inspectorate allocated R4, 770 million and Information Technology, which is allocated R38, 053 million.

This expenditure will be for the provision of policy direction on public expenditure priorities and to improve the effective and efficient use of resources within an affordable level as required by the PFMA.

Programme 4: Provincial Contingency Reserve

A total amount of R400m was allocated to this programme. This reserve will be allocated during the adjustments in this year, 2001/2002 financial year.

Programme 6: Provincial Conditional Grants

An amount of R297, 384m have been allocated to the programme. This is an approach that the National Government has introduced to enforce fiscal discipline to all provincial departments.

The expenditure relating to this programme will be for enforcing efficiency in the use of public funds entrusted to all provincial treasuries.

Challenges for 2001/2002

Own Revenue

We have made allusion to revenue generation and collection as one of our critical challenges

Migration to BAS and challenges in the 2001 Financial Year

We have already stated that that the migration to BAS in the coming year comes at a time when the PFMA (chapter 5) imposes serious responsibilities on the Accounting Officers (Heads of Departments). The responsibilities of the Accounting Officers relate to budgetary control, general and reporting responsibilities

Accounting officers will be responsible for the complete management of their departments including keeping their own books of accounts and reporting. The work that Finance was doing for departments will be decentralised to departments. Obviously, the staff will have to be decentralised with the functions, and progress have been made in this regard.

The Department of Finance will continue to perform Treasury functions as required by the PFMA (chapter 3). A workshop will be held this week with all Accounting Officers with their Finance Managers to discuss the responsibilities of the Accounting Officers and the functions of the Provincial Treasury.

CONCLUSION

In conclusion, Mr Speaker, I hereby table the Department of Finance's expenditure request for R 452, 602 m to the House for its consideration and approval.

Finally, Honourable Speaker, I would like to take this opportunity to thank the Premier for the trust he placed on me to act as an MEC. I also wish to extend my profound appreciation to:
* My colleagues in the Executive Council;
* The members of the Portfolio Committee; and
* All members of staff of the Department of Finance.

Mr. Speaker, honourable members of this House and every one present here today

I thank you.

Issued by Finance, Mpumalanga

13 May 2001